Dell continues to win market share and turn out record quarterly profits, but two recent surveys show that the company has slipped, when it comes to a more subjective measurement: customer service.

According to two new reports that rate the satisfaction of PC buyers, Dell's scores have declined in recent months. While statistically, the results are not catastrophic for a company that prides itself on offering superior service, it's a potentially troubling trend Dell executives acknowledge and have taken steps to address.

News.context

What's new:According to two recent reports, customer service at leading PC seller Dell has slipped in recent months. Although the declines are statistically small, they show a steady trend of sinking satisfaction with Dell's support.

Bottom line:For a direct seller of PCs in a largely commoditized business, customer service is a chief concern, and the company is actively trying to improve its satisfaction scores.

The March issue of Consumer Reports, which came out last week, included a survey of 4,100 consumers, who gave Dell 62 points out of a possible 100 for its support on desktop PCs. Although it still managed to top competing brands Hewlett-Packard and Compaq, which scored 54 and 51, respectively, Dell's rating represented a decline from the magazine's last desktop support survey, published in June 2003, in which it received a 64.

Apple Computer led the pack, with 74 in the recent survey, while Gateway scored 61. A score of 80 would mean that respondents were very satisfied, while 60 is described as fairly well satisfied. Differences of more than four points in the survey were meaningful, the report said.

While the most recent changes appear incremental, Dell's overall tech support scores for desktop PCs have dropped substantially since 2001, said Jeff Fox, senior project editor at Consumer Reports. Dell scored a rating of 74 in December 2001 and a 65 in September 2002.

Consumer Reports' findings are echoed by data from research firm Technology Business Research (TBR). The Hampton, N.H., firm's fourth-quarter report on support satisfaction among corporate buyers, published this week, shows that Dell's satisfaction rating slipped to 80.98, down from 83.4 in the third quarter of 2003.

TBR's survey polls buyers on eight aspects of support, including their overall satisfaction with a company's support service, and assigns each one a weighted score for a total of 100 possible points.

Although Dell still topped rivals HP and IBM in the TBR survey, its score was the lowest seen since the research firm began tracking Dell's satisfaction levels in the first quarter of 2001. Although part of the change could reflect Dell's rapid growth rate during 2003, the company's fourth-quarter score dipped well below its average rating of 82.9, said Julie Perron, manager of primary research at TBR.

Dell doesn't dispute that its satisfaction levels have dropped. Instead, it is working to remedy the situation, said Gary Cotshott, vice president and general manager of service at the Round Rock, Texas, company.

"We recognize that we've had some issues, particularly in the client area, which we're addressing," Cotshott said.

Hold, please
Indeed, Dell ran into a perfect storm of sorts during the period in which the surveys were taken. Telephone tech support hold times were lengthier--at times they were exacerbated by occurrences such as computer worms--coupled with some shortages of replacement parts, Cotshott said. Dell was also in the process of expanding and training its tech support staff.

"We reacted to it, and we have driven improvements in the metrics that we believe will drive through ultimately--because TBR's a lagging indicator--as we move through the course of the next three to six months," Cotshott said.

Shipments for the company, which pioneered direct sales of computers to consumers, surged 25 percent year over year to 25.8 million units in 2003, making it the world's largest PC maker, according to research firm IDC. Thanks to the increase in shipments, Dell's market share grew to 16.9 percent in 2003 from 15.1 percent in 2002. Shipments for HP, its closest competitor, grew 14.5 percent last year to 25 million, giving it a market share of 16.4 percent in 2003.

While all PC companies talk about the importance of customer service, Dell has been particularly vocal for several reasons. By cutting out the middleman, Dell has a closer relationship with customers, thus taking all the praise from happy buyers--and all the blame when things go wrong. In addition, the PC business is becoming increasingly commoditized, marked by similarly equipped machines and price erosion. One way to stand out from the crowd is to pamper buyers by offering better service and support than competitors.

Dell's emphasis on service emanates directly from the top. CEO and founder Michael Dell wrote in his 1999 book, "Direct by Dell," that relatively sketchy support offered by electronics stores inspired him to build his own company. Dell goes so far as to spend time each year manning the phone lines, taking orders.

But Michael Dell didn't answer the phone when Phil Isernio, a business owner in Seattle, called to inquire about a late shipment.

Isernio said it took Dell more than two months to deliver his Dimension 4600 desktop PC, ordered in October 2003, for which some accessories arrived in three days. After growing frustrated with his salesman and Dell's other customer support options, Isernio turned to e-mailing the company CEO.

The tactic worked. A company representative contacted Isernio, resubmitted the order and offered a $150 credit for his trouble, as well as a $150 discount coupon for a future order. Isernio is now considering buying a Dell notebook, despite not yet hearing back from Dell regarding questions about the price quote.

Anecdotally, Isernio isn't alone.

"Dell's service reputation has always been based on its quick response in handling customer issues," said Brooks Gray, an analyst at TBR. But, he noted, "Of the 20 people I've recommended Dell to over the past few years, at least 50 percent of them have experienced issues with support in one form or another."

Despite the evidence that customers have been unsatisfied with Dell's tech support, executives maintain that the vast majority of its customers are happy with their purchases.

"The majority of our feedback from customers is positive--both from surveys and the awards we win (from) third-party publications," said Todd Penner, director of Dell's U.S. consumer tech support operation.

Get it solved the first time
Dell also constantly evaluates its tech support operation. Aside from increasing the size of its staff, it has shifted its priorities to resolving problems on the first call. The company is also examining how its customer care organization can resolve order-related problems more quickly, Penner said.

Among the methods Dell is using is a new jack-of-all-trades approach that enables some customers to speak with one person who has the skills and authority to tackle any number of customer care or tech support problems in the same call. Dell may not implement the system widely, however, as customer care agents and support techs typically do very different jobs.

The company has also rerouted some telephone tech support calls back to the United States from Bangalore, India. In addition, Dell to help anticipate the needs of large server and storage customers in the United States.

While those and other changes may help Dell reverse its recent survey results, at least a few people may consider them too late.

Trevor Anderson, an information technology manager at a law firm in Canada, said he switched brands because of rising frustration.

Anderson said he finished swapping the 220 PCs and servers he manages to HP models last year, after he grew weary of the way he said Dell's telephone tech support employees treated him. He said they asked him simplistic, trouble-shooting questions and put him on hold for long periods. He also said he disliked working with different salespersons and on-site support people Dell contracted.

"HP works locally with resellers. I've had the same (HP) reseller since 1998. I know the salesman. He knows our history here," Anderson said. With Dell's support, "it was like you were being talked down to; like you didn't have any experience with technology."

In some ways, Dell is fighting an uphill battle; its focus on growth naturally means that it will attract more consumers who are naturally less skilled in operating PCs and thus need more assistance.

"As the proportion of the consumers in the mix rises, (Dell) is naturally going to increase in its share of complaints, even if it isn't doing anything differently," said Roger Kay, an analyst at IDC. That's because increasing market share requires a "devil's bargain. You have to support inexperienced buyers in order to get their business."

Indeed, historical data from Consumer Reports shows that few people were satisfied with the service they got from any vendor. Only 52 percent of those surveyed by Consumer Reports said they were highly satisfied with support from any PC manufacturer in 2001. During 2003, those who were highly satisfied shrank to 43 percent, Fox said.

Regardless of the reasons for its slide, Dell said it is committed to improving the PC-buying experience for consumers.

"The actions we've taken have (already) driven substantial improvements across the board," Cotshott said. "Over time, you'll see us emerge again as the industry leader."